HOUSTON – (By Dale King, Realty News Report) – Texas leads the nation in apartment construction with Dallas ranked No. 1 and Houston ranked No. 4, according to RentCafé’s latest Apartment Construction Report.
Austin ranked No. 7 in multifamily construction in the report, which ranks the markets according to the projected number of units to be completed by the end of the 2021. .
The Houston metro area is set to complete 15,760 new apartments this year – 12 percent more than in 2020, says the analysis by RentCafé, a nationwide apartment search website.
The RentCafé tally gives Dallas-Fort Worth and its environs the gold star in rental unit construction. The first-place finish this year is the fourth in a row for Big D, which expects to count 21,173 new apartments on the market by year’s end.
Meanwhile, Austin is set to build 11,919, claiming the seventh spot nationwide.
“Notably, the Dallas area continues to grow,” says RentCafé, “with the recent relocation of several large firms, such as financial services giant Charles Schwab, as well as the country’s largest commercial real estate services company, CBRE Group.”
After giving Dallas its due, the report offers the following highlights for H-town:
- Houston is making a 12 percent recovery from last year’s 14,094 new units, enjoying an even greater completion rate than the lows of 2019 when only 10,179 apartments were built.
- The year 2018 was nearly as slow with 11,841 units finished, a major drop from 2017 when 21,701 rental units got their spots on the rental listing pages.
- The main contributors to apartment development in the area this year are Houston itself, with 7,308 expected units; Katy, projected to build 1,884 new apartments; Spring, set to build 1,580; Richmond, with an eye on hitting 992; Cypress, set to deliver 603 units; Conroe, with 544 coming off the drawing board by the end of the year; The Woodlands, 502 and Humble, 491.
At the national level,RentCafésays developers are on track to place 334,000 new apartments into the rental stream by the completion of this year, surpassing the 300,000 mark for the sixth year in a row.
“The pandemic shifts and resurgence of the residential rental market brings new residential supply into focus,” says Doug Ressler, manager of business intelligence at Yardi Matrix, RentCafé’s sister company. Apartment projections for 2021 are calculated based on a Yardi Matrix proprietary algorithm, which includes confirmed and likely completions based on the issuance of certificates of occupancy. Apartment projections are estimates and subject to change.
Ressler explains this year’s numbers reflect a “lack of entry-level housing supply and rising home prices [which] show the multi-family rental market demand increasing as new renters enter the market and Millennials extend their rental commitments.”
RentCafé tracks yearly rental unit numbers back to 2011 when 114,000 lease dwellings rolled out by year’s end. Figures continued to grow annually until they maxed at 357,000 in 2018. The following year, the output dropped back to 341,000, then 343,00 in 2020 and down again to 334,000 for 2021.
New York No. 2 and Arizona City No. 3
This year, the national ranking finds New York in second place with 19,375 units finding their way to the market and Phoenix ,third, with 15,846 apartments receiving their completion documents.
Actually,metros like Phoenix, Charlotte, N.C. and Orlando, Fla. — which haven’t been construction-crazed in the past — “are now making waves with impressive numbers of projected new apartments,” says the RentCafé report.
The estimated 334,000 units to be opened in the U.S. by year’s end “reflect the striking difference between the aftermath of the pandemic crisis and that of the housing crisis of 2008,” says the RentCafe report. “In 2021, there were nearly three times more apartments under construction than there were in 2011.”
Compared to 2020, there’s only a 2.5 percent decrease in new units, with apartment construction maintaining a steady pace under some difficult circumstances, which include the pandemic, developers’ struggles to find qualified workers, funding, permits and the more-recent sky-high price of lumber.
Not all the figures in the report show a skyward demeanor. “Six of the top 20 metros are experiencing a decrease compared to last year. Among the most surprising appearances on this list are Denver (down 46 percent) and Seattle (down 19 percent), which were previously two of the top metros for new apartments throughout the 2010s.”
And while Dallas-Fort Worth continues to build more than any other urban center in America, it’s still one of the six regions that saw some of the biggest slowdowns, with a 13 percent year-over-year drop in the number of units expected to be delivered this year. The other metros failing to match their 2020 levels were Austin (down 10 percent), Boston (falling 5 percent) and Minneapolis (slipping 0.3 percent).
Alternatively, some metros are making outstanding progress compared to last year, with Charlotte and San Jose seeing the highest increases, at 100 percent and 79 percent, respectively. In fact, the Charlotte metro — along with the Orlando and Phoenix statistical centers — are the surprises on the RentCafe list, making outstanding appearances. All three are expected to increase their apartment supplies by more than 70 percent, with the Orlando metro set to rise by a notable 78 percent and the Phoenix metro by 76 percent.
Aug 31, 2021 Realty News Report Copyright 2021
Photo: By Ralph Bivins, Realty News Report Copyright 2021
For more about Texas real estate, check out the book Houston 2020: America’s Boom Town – An Extreme Close Up by Ralph Bivins. Available on Amazon http://tiny.cc/4a2g6y
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File: Texas Leads Nation in Apartment Construction
File: RentCafe. Texas Leads Nation in Apartment Construction. Yardi Matrix. Phoenix. Charlotte